The ministry of civil aviation on Friday released the highly anticipated Draft National Civil Aviation Policy 2015 (NCAP 2015), which aims to make flying affordable for the masses. NCAP 2015 focuses on 16 critical areas of the Indian civil aviation industry ranging from safety to regional connectivity, bilateral traffic rights, and maintenance, repair and overhaul (MRO) operations.
The government’s recommendations in NCAP 2015 have been placed in the public domain, as it seeks feedback from various industry stakeholders. “The final NCAP 2015 will be released after incorporating the feedback from stakeholders and obtaining the necessary approvals,” read the draft note.
According to NCAP 2015, in financial year 2014-15, 70 million (7 crore) domestic air tickets were sold. “If every Indian in the middle class income bracket takes just one flight per annum, it would result in a sale of 300 million tickets,” stated the draft policy. “This will be possible if the air fare, especially on the regional routes is brought down to an affordable level.”
The government’s vision as stated in NCAP 2015 is to grow domestic ticketing to 30 crore by 2022 and 50 crore by 2027. “India has the potential to be among the global top three nations in terms of domestic and international passenger traffic. It has an ideal geographic location between the eastern and western hemisphere; a 300 million-strong middle class and a rapidly growing economy. Despite these advantages, the Indian aviation sector has not witnessed the level of growth it should have and at present, it is ranked 10th in the world,” read the draft policy.
In a bid to strengthen regional air connectivity, the government plans to develop no-frills airports at a cost not exceeding Rs 50 crore. “At present, only 75 of the 476 airstrips/airports have scheduled operations,” citied the draft policy. Besides, based on a regional connectivity scheme, which will come into effect from April 1, 2016, the policy speaks of capping regional air fares to Rs 2,500 per passenger.
On the much debated 5/20 rule, which allows Indian carriers to fly abroad after five years of domestic operations and having a fleet of 20 aircraft—NCPA 2015 has made three recommendations. It proposes to either abolish the rule or continue with it. It also proposes to introduce a concept of Domestic Flying Credits based on which Indian carriers will be allowed to fly overseas.
NCAP 2015 also dwells on considering an Open Sky aviation policy with SAARC countries and those countries beyond a radius of 5,000 kilometres from New Delhi. A footnote in this section states that foreign direct investment in airlines would increase from 49 percent to above 50 percent, “if the government decides to go in for open skies for countries lying within 5,000 km radius”.
Another key area that would get a fillip if NCAP 2015 is approved is the MRO business. Indian carriers spend close to Rs 5,000 crore in MRO activities of which 90 percent is spent outside the country in Sri Lanka, Singapore, Malaysia, and the UAE. “Given our technology base, the government is keen to develop India as an MRO hub in Asia, attracting business from foreign airlines,” said the policy. And to encourage this, MRO facilities will be exempt from service tax.